Nearly 2000 jobs have been cut from the core public service in the past two years, as the Government signals further state sector cuts.

LATEST:
The decrease is a drop of around five per cent on the number of positions in what the Government terms back office jobs at the time National took power in late 2008.

The number of people working in "core government administration" was capped at 38,859 in March 2009.

Figures issued by State Services Minister Tony Ryall this morning show that had dropped by 1886 to 36,973.

The decrease is about 1000 less than Ryall's office indicated in error yesterday.

Ryall said that at the same time as the cuts, there had been increases in numbers in frontline roles, including 300 more police officers, around 1600 more teachers and more than 1000 nurses and 500 doctors.

"The Government is determined to see better results from public services and expects that resources are shifted to the frontline services where they are needed most," Ryall said.

"We are focused on making sure New Zealanders receive improved frontline services like health, education and public safety, and this means we need to reduce administration overheads."

He said more reductions would be made to "back office" jobs in the next few years as Government departments confronted effective budget cuts due to tight spending constraints.

"Like the rest of the world, New Zealand will continue to experience tight financial times for some years to come. The times call for conservatism and restraint. And this Government will continue to call on the public sector to play its part."

Areas in which workloads were expected to grow as a result of government policies and the recession were excluded from the 2009 cap.

They were the Corrections Department's prison and probation services, Work and Income, Child Youth and Family, the police, the Defence Force and the Parliamentary Service, which provides staff for MPs.

A Cabinet paper outlining the numbers shows there were 778 more people in working in those four agencies, and increase of six per cent since 2008.

The cap includes five Crown entities: Housing NZ, the Qualifications Authority, Trade and Enterprise, the Transport Agency and the Tertiary Education Commission.

'NICE TO HAVE' PROGRAMMES ON THE BLOCK

In a speech to public servants yesterday, Finance Minister Bill English stepped up his warning that some programmes and departments were luxuries the country could no longer afford as the country heads towards a record deficit.

He said the Government was eyeing up spending on things that might be "nice to have", but which came at the expense of necessities.

The plans were criticised by BERL chief economist Ganesh Nana, who said cutting more state sector jobs and squeezing spending further at this point in the cycle risked keeping the economy down for longer.

The Government has shifted about $4 billion from what it calls "back office" spending to other priorities in the last two Budgets, but English made it clear the squeeze was on for departments to prioritise services over jobs.

"Numbers have reduced by a couple of thousand core public servants since we became the Government and we would expect they will continue reducing because these departments are not getting funding for wage increases, they're not getting funding for inflation but we do expect them to continue to provide the services New Zealanders need."

He would not put a figure on likely job losses, but an 18-month Treasury-instigated review from KPMG is due within weeks, delivering targets for public service bosses to meet in relation to administrative staffing costs.

Public Service Association national secretary Brenda Pilott said there was no way the Government could cut spending further without cutting services.

Morale within the public service was plummeting as staff faced a fresh onslaught of "restructuring fever", she said.

"They've been very restrained over the past two years, pay movement has been very modest ... the reward they've had for that is [nearly 3000] of their colleagues have lost their jobs from constant restructuring."

The cuts so far had "gone under the radar" of most New Zealanders, but "we are about to move into a phase when those public spending cuts are going to be felt in the community".

However, English said the Government was staring down the barrel of a record deficit and something had to give. The operating deficit was expected to reach $16 billion because of the earthquake and other costs.

English confirmed that Working for Families benefits at the "top end" were likely to be a casualty but rejected suggestions MPs should take a pay cut to set an example.

"The MPs have done their bit by having no pay rise until before Christmas."

Nana said the Government was making the cuts at the wrong time.

''You do that at a time when there is strong growth in the New Zealand economy, there is competition for resources,'' he told Radio New Zealand.

''That's when you start rebalancing and bringing that structural deficit down, because there are other places for those resources to go, there are other jobs available for those people. You don't do that at a time when we're at basically a static period.''

But English said the Government could not be accused of being tight while it was so far in the red.

''As the needs have arisen, we have actually gone and borrowed the money to absorb those extra needs in the Government deficit,'' he told RNZ.

''The time does come, though, when you have to turn it around. So, when it reaches ... the highest deficit we've ever had, I think, we do need to start turning it around.

''If the theory was correct that running a big deficit means your economy grows fast, then we'd be growing at five or six per cent and we're not.''